Washington, D.C.–The U.S. Green Building Council and the Joint Center for Housing Studies of Harvard University have released a study, “The State of the Nation’s Housing 2010,” which included a detailed description of the state of the U.S. rental housing industry. Like the overall condition of the American housing as the country struggles to return to some kind of economic normalcy, the apartment market is a story of bad news leavened with some good news, at least in the mid- to long term.

“On the downside,” the report notes,” high unemployment–especially among minorities and the young–is a drag on demand,” for apartments. “In addition, the narrowing cost differential between owning and renting could keep first-time home-buying strong even after the federal tax credit expires.” (Though it should be noted that this week the National Association of Realtors reported that existing home sales were down 2.2 percent in May compared with April.)

On the upside, the report continues, so-called echo boomers, who are the children of the baby boomers and a fairly substantial cohort in their own right, are starting to form independent households; homeowners who have lost their homes to foreclosure during the housing meltdown are now obliged to turn to renting; and some would-be homeowners are now unable to qualify for a mortgage, and they too will be turning to rental properties for shelter.

The supply side of the U.S. apartment market is, for the moment, being pulled in different directions. “The drop in multifamily production will slow the growth of rental units,” the USGBC and Harvard explain. “Within a year, new completions will start to fall sharply. At the same time, though, many frustrated owners of vacant, for-sale condos and single-family homes may attempt to recent their units rather than accept low sales prices.”

The combined effects of these forces will determine how fast rental property values rebound, loan performance improves, and credit flows more readily to multifamily–but the outcome isn’t clear yet. The wild card in the short- to mid-term, however, is how quickly job growth comes to the U.S. economy, and that isn’t clear yet either.

The longer-range outlook for the apartment market offers more grounds for optimism, the report asserts. The main reason: the burgeoning populations of immigrants and of older people.

“Renter household growth in 2010-20 should easily top the 3.1 million mark reached in 1999-2009,” the report says. “Indeed, the total number of renters is expected to rise by about 3.8 million even under a low-immigration scenario and by about 5.0 million under a high-immigration scenario. Regardless of what happens to immigration, the number of renter households over age 55 will likely rise by more than 3 million in the coming decade as the baby boom generation ages.”